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Fletcher Building Ltd FBU

Morningstar Rating
NZD 2.95 +0.08 (2.79%)
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Company Report

Fletcher Building: New Banking Agreements Improve Debt Flexibility

Changes to Fletcher’s banking agreements provide additional financial flexibility if the recovery in New Zealand construction takes longer than expected. Fletcher has twice downgraded its earnings expectations for fiscal 2024 amid weaker residential construction demand, and we forecast a deterioration of net debt/EBITDA to 2.3 times at the end of fiscal 2024, above the firm’s target of 2.0 times. Although we view the balance sheet as stretched, we do not expect the firm to breach its covenants, but the new, more generous short-term covenants and longer loan terms provide extra leeway if needed.

Price vs Fair Value

FBU is trading within a range we consider fairly valued.
Price
NZD 2.95
Fair Value
NZD 6.10
Uncertainty
High
1-Star Price
NZD 4.20
5-Star Price
NZD 1.92
Economic Moat
Hpwxq
Capital Allocation
Hwhk

Bulls Say, Bears Say

Bulls

An improvement in the Australia business is likely to lift ROIC and increase shareholder value.

Bears

Fletcher operates in cyclical and competitive markets with minimal differentiation and is prone to periods of operating deleverage and structural margin compression

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Trading Information

Previous Close Price
NZD 2.87
Day Range
NZD 2.832.95
52-Week Range
NZD 2.835.64
Bid/Ask
NZD 2.88 / NZD 2.97
Market Cap
NZD 2.31 Bil
Volume/Avg
2.2 Mil / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
13.84
Price/Sales
0.28
Dividend Yield (Trailing)
5.42%
Dividend Yield (Forward)
10.85%
Total Yield
5.42%

Company Profile

Fletcher Building is a New Zealand-based building materials company with operations focused in New Zealand, but also extending to Australia. It has a conglomerate structure with diverse operations across concrete, building products, steel, retail distribution, construction, and development. Having previously expanded internationally through acquisitions, operations have gradually refocused on the New Zealand and Australian businesses.
Sector
Basic Materials
Industry
Building Materials
Stock Style Box
Mid Value
Total Number of Employees
3,851

Competitors

Valuation

Metric
FBU
BLD
HOLN
Price/Earnings (Normalized)
13.8431.8113.49
Price/Book Value
0.683.011.70
Price/Sales
0.281.781.66
Price/Cash Flow
5.0910.698.47
Price/Earnings
FBU
BLD
HOLN

Financial Strength

Metric
FBU
BLD
HOLN
Quick Ratio
0.642.031.08
Current Ratio
1.692.491.44
Interest Coverage
0.395.978.05
Quick Ratio
FBU
BLD
HOLN

Profitability

Metric
FBU
BLD
HOLN
Return on Assets (Normalized)
0.40%5.74%5.64%
Return on Equity (Normalized)
1.02%10.99%11.43%
Return on Invested Capital (Normalized)
0.46%8.04%8.99%
Return on Assets
FBU
BLD
HOLN
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